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Federal Guidelines Necessary to Protect Consumers from Greenwashing, People’s Counsel Tells Federal Trade Commission

April 26th, 2023 by WCBC Radio

With energy companies increasingly trying to benefit from consumer concerns about the environment, utility customers are vulnerable to confusing, misleading, and deceptive marketing practices, the Office of People’s Counsel told the Federal Trade Commission in comments filed this week. The FTC should therefore update its “Green Guides” for marketing energy products, OPC said, to protect utility consumers and to provide guidance to well‑intentioned companies on best practices for environmental marketing.

“Many gas companies and retail energy suppliers engage in marketing practices that are confusing and misleading to consumers,” People’s Counsel David S. Lapp said. “Despite the harmful emissions of fossil gas and its contributions to climate change, gas companies market gas as ‘clean,’ encouraging consumers to make investments that are contrary to both their long-term financial interests and State climate policy.”

Studies, including OPC’s own technical analysis, show that electrification is the least-cost path for Maryland’s residential customers as the State acts to meet its climate mitigation goals. Moreover, for many applications, electric technologies are already lower cost than continued use of gas. And because gas use causes greater environmental harm than electricity, OPC’s comments to the FTC explain, gas companies mislead customers when they promote fossil gas as “clean energy” without full disclosures or qualifying those claims.

Claims about “renewable” energy also can be highly misleading, OPC said. Many customers understand the term “renewable energy” to mean resources that don’t emit greenhouse gases when consumed, such as wind, solar, geothermal, and hydropower, but the term “renewable” is often used for other energy sources that cause environmental damage. “Renewable natural gas,” for example, often still emits greenhouse gases and other harmful pollutants.

OPC’s comments also address claims about renewable electricity based on “renewable energy credits,” or “RECs.” Maryland has a renewable portfolio standard, which energy suppliers comply with by acquiring RECs. RECs are defined by Maryland law. But other states define “RECs” differently, and customers aren’t always told what they are purchasing when they buy “renewable” electricity. In some cases, the seller may be merely complying with its already existing legal obligations. OPC’s comments suggest that the FTC’s Green Guides be updated to prohibit a company from marketing its products as green or renewable if they merely comply with existing state law and to provide that all marketing based on RECs includes disclosures explaining the source of the claim.

OPC’s comments also address carbon offsets, which are increasingly being used in energy marketing—often with little oversight. Among other points about carbon offsets, OPC recommends that the Green Guides require sellers to provide information about where the claimed offsets are occurring and whether they are offsetting emissions in a way that helps meet greenhouse gas emission reduction targets. A retail supplier marketing to Maryland customers, for example, should not be able to promote carbon offsets without disclosing whether the offsets are verified to help Maryland meet its greenhouse gas reduction goals.

OPC filed its comments in response to an FTC request seeking input on whether and how the agency should update its Green Guide marketing guidelines.